Spousal Bypass Lifetime Trusts

Greater Tax Planning Flexibility

 

Spousal Bypass Lifetime Trusts

Greater Tax Planning Flexibility

Tax Liability

One way an inheritance tax liability can occur is when a person dies and a payment from a life assurance policy is triggered.

It is common for the payout to be made into the estate of the deceased, which when added that person’s own assets, can sometimes lead to an inheritance tax liability.

To prevent this, life insurance policies are often written in trust to the surviving partner, but that merely delays any inheritance tax liability for when they die too.  We can arrange for the proceeds of your life assurance policy to be paid into a Spousal Bypass Trust when you die, which you set up during your lifetime.

More Inheritance

The trust itself is a discretionary trust.  You would normally specify the beneficiaries of the trust as being your surviving spouse or partner, your children and any grandchildren.  However, this has special provisions built into it – for example, rather than your trustees giving trust funds directly to a beneficiary they can loan them.  This means that when your surviving spouse or partner subsequently dies, although they have had free use of the trust fund, the amount they borrowed is seen as a debt on their estate, which reduces the value of their estate when calculating their inheritance tax liability.

Once again, more inheritance for the other beneficiaries to the trust…less inheritance tax…greater tax planning flexibility!

On behalf of APS Legal & Associates Ltd, Head office: Worksop Turbine Innovation Centre, Shireoaks Triangle Business Park, Coach Close, Worksop, Nottinghamshire, S81 8AP
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